www.matteofabiano.com

business

For the past 5 years, I have been involved with BAIA, Business Association Italy America. I am currently a member of the board and have been its Executive Director in 2009 and 2010. BAIA is a nonprofit association of professionals, entrepreneurs, students and business people who operate between Italy and the USA.

I am often asked “how is BAIA doing?”. The nonprofit just celebrated its 5th anniversary, so I took a step back and took a moment to look at what we have done lately. By all accounts, BAIA is going strong:

In July 2011 BAIA launched BAIAbase, the first ever open and editable database of companies operating between Italy and the USA.

This massive amount of work has been accomplished through the efforts of a dedicated team of pro-bono volunteers (BAIA has no paid staff and every member of BAIA’s Governance and Board is required to volunteer time to run BAIA programs). Most of all, it has been the result of terrific team effort. It is so rare to find such level of team performance in a professional environment. The fact that those who contributed to it do so for free makes the results all the more remarkable.

I have been in looking into crowdsourcing business models for the last couple of months. Personal and professional interest. As often the case, when a subject is on your mind, you stumble upon it. So, when ads like this one started popping up on my Facebook page I clicked through.

The ads send you to Logo tournament (LT), a crowdsourcing play on logo design services. It’s quite straightforward. Company needs a new logo, it submits a “contest” to LT and sets a price. Designers send in one or more designs. The best design wins and the designer gets paid.

I tried to figure out how a business model like LT’s would look like.

Revenue

LT charges designers a 15% transaction fee. Companies set the price they are willing to pay in advance, with a minimum allowed of $250. Paypal transaction fees are passed on to customers.

Note that LT will take the money from companies in “escrow” and select and pay a winner at the end of the contest even if a company does not select a winning design. That means that if a contest is listed, the money will be paid and the commission earned.

LT lists all open and closed contests at any given time. I counted about ~165 open concurrent contests with an average age of 5.1 days and ~1,800 closed contests. I sampled 100 contests at random and calculated an average prize amount of ~$315. Assuming a steady flow of contests, that means about ~1000 contests a month (i.e. 30/5.1*165=971).

With commissions at 15%, that adds up to a monthly revenue of close to $50,000. The estimate is obviously highly sensitive to the monthly contest count estimate. Here’s a back of the envelope revenue estimate (with lower and higher estimates to test for sensitivity).

Of the 57 economies ranked by IMD, the US still ranks No. 1 in 2009. Hong Kong has switched places with Singapore to gain the 2nd place and is swiftly “closing the gap” with the US. Switzerland maintains its 4th rank from last year.

Out of 10 people that can do a job, 1 is an A-player, 3 are B-players and the rest are C-players, or so the story goes… Simple enough, right? So, I ran a couple of public polls on Linkedin. Just for fun. They probably have no statistical relevance, but the results are interesting :).

First, I asked respondents to self select in the A, B or C player category. 78% put themselves in the A-Player list…

In a recent post, Auren Hoffman argues that, in this economy, hiring has become harder… and he is rather convincing at it:

That’s right … hiring in tough economic times can actually be much harder than when times are good. In a downturn, the amount of resumes from C-Players massively increases while the amount of resumes from A-Players probably remains the same.

I generally agree with Auren’s premise and conclusions, though I believe it is important to recognize that most companies will never have access to the A-Player pool in the first place, and explained why in my comment.